“The finer detail on the government’s proposals has taken much longer than expected to filter through. Though announced in the April Budget, the industry is still awaiting the specific detail on how the scheme will operate and what companies will be covered.”

“At face value, the scheme sounds like a great and extremely timely opportunity for the small business community. However, the proposed scheme is tabled to run only for the next six months, and yet few will be surprised if the current downturn lasts beyond the next 12 months or more – this does little to help businesses who are expecting to trade beyond the end of 2009.”

“In addition, as the minimum amount of top up cover is £20,000, but most of the bad debts we’ve seen incurred by our clients are at the smaller end of the market, few of the nation’s smaller turnover businesses will really be able to benefit.”

“Indeed, because the scheme does not include reinstating limits that have been pulled completely (instead applying only to companies where cover has been reduced, for example from £100,000 to £70,000) the number of companies who are likely to benefit from the scheme is going to be relatively low. Cover also may have been pulled from sound companies but those within the ‘wrong’ type of industry, for example the motor industry, as exemplified by the news that GM has gone into bankruptcy.”

“And finally, the hefty fees – although a one-off rather than an ongoing charge, the two per cent to top up is above typical market rates and this, combined with insurance premium tax at five per cent – are likely to be less of an incentive and more of a barrier for businesses who want to protect themselves.”

“While we support the government in its attempts to bring about some liquidity and stability for small businesses, these proposals are simply not clear enough, have taken too long to be clarified and do not go far enough to help small business owners ride out the recession.”

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